>> mckesson to 110 in june now it's reversing on this news. the strategy at least for me will be to sell half take a look at what will unfold. >> the dow is up 72. it will be interestingto see how the rest of the day plays out including the next hour. speaking of which is the exchange which begins now. >> thank you, scott. hi, everybody. marngts markets are in limbo has china and the u.s. go tit for tat in the trade war we'll talk about that. and $216 billion that's how much the tech sr lost in yesterday's massive drop and apple is down more than 15% from its highs last year we'll see if now is the time to get in plus, fast food does remain a port while trans ports keep singing a sorry tune we start with the markets. and here the numbers >> it may be limbo and it may not be the gains that some folks

would want after a massive drop in the market. however, it is still green across the board albeit off the best levels of the day. the dow is up 229 points we got down as low as only being up 6 points. for those people who like to look at the s&p 500, the highs, we were up about 29 points the s&p 500, the nasdaq leading the way higher up about one half of 1%. one part of the markets we're keeping a close eye on this is investment grade corporate debt versus high yield corporate debt as you can see over the course of the past year, there is been a pretty big divergence happen here and we saw it exacerbate over the course of the last couple days. high yield debt selling off considerably more. we'll see if that theme continues. because yesterday we showed you some of the worst performers in the dow. let's take a look at the same stocks today these four stocks, china

exposure, apple, intel, 3m, nike, down big apple is rebounding by about a percent. intel, about a half percent. 3m is still down we'll watch those components thank you. >> welcome to the exchange, everyone the ten-year yield is holding relatively steady after plunging below 1.7% overnight for the first time since 2016. after yesterday's sell yacht, investor are selling off a 25% chance of a rate cut in is sxept about the same thing, a 75% chance of another quarter cut in december goldman sachs predicting october for they have this year. let's drill down on the market's response to all this as we watch for the next round in this trade war. >> and the markets reminded us yesterday, could it get a lot worse. the markets are calmer don't kid yourself

yesterday the futures moved at a nearly 5% trading range over a 12, did hour period. that doesn't happen very often it is a remind per a trade war could get much nastier very quickly. the central lesson is that it is a lot more than just tariffs it could quickly move to a wider war, a currency war, for example, or even physical blockades. that has happened throughout history. so it is not just how much is being paid in tariffs. it is more complicated citigroup said the trade war threats, the potential currency devaluations was enough to make them cut their earnings estimates for the s&p 500 for 2019 and 2020. this is getting very real now. today's action starting higher you see this drifting kind of lower. this very little follow-up buying interest.

it is a reminder, the market uses currency wars as another aspect of the trade war. that full blown trade wars are multifaceted and can get out of hand very quickly. >> thank you president trump's top economic adviser speaking out about the trade war with china on cnbc earlier. eamon? >> yea larry kudlow making the case for continued patience making the case as the trump administration has done throughout the entire trade war with china the chinese have a less good position than united states does. here's what he had to say. >> i think china is getting hurt significantly. much more than we are. so okay. if they want to wait, maybe so but the chinese economy is crumbling. it is just not the powerhouse it was 20 years ago everybody knows that and as i said before, supply chains are moving out.

the demands for their goods is moving to other places >> so that's one part of the argument from the administration today that china is getting hurt worse. therefore they're more likely to agree to a term on u.s. terms. the other part came in the form of a tweet from president trump earlier today in which he signaled to farm country that he has their back in case of further chinese retaliation as we have already seen he said our american farmers know that china will not be able to hurt them and that their president has stood with them and done what no other president would do and i'll do it again next year if necessary so the president signalshere that he's willing to send more support payments to american farmers next year if this trade war continues into 2020. that seems likely. they're looking at it as stand-off. the president is suggesting that he thinks the chinese want to wait until after the 2020 election we'll see what happens

>> out with a speech, saying monetary policy cannot react day to day to all the give and take around trade and tariffs additional policies could be desirable. you've got some other policy action already in the wings. >> it is now more accommodating than it was this time last year. he believes it to be relatively small. he said that co-still support another quarter point but sounds the less aggressive in that chart you put up there 74% for 25 base point cut in september. another 73 for december. he sounds maybe a little more

reluctant than markets are pricing in right now i don't see any adverse reaction. this is the easing the market had to back off i don't know that it is learning about how to get over its skis. >> that's exactly right. the markets having a volatile session today after the big sell-off we were briefly negative after opening up by about 230 points what should investors do as we struggle for direction let's bring in knee hennessey.

dieanne is chief economist at grant thorton. i'll start with you. is steve right the markets think they're in charge and not the fed? >> he's half right let's face it. the fed is likely to drop rates at least once, if not twice now later this year. it's not a reaction to the markets per se it is a reaction to the fundamentals the tariffs aside, we were already in weak shape. so the trade war is, we need that economically like a hole in the head right now global economic deceleration weak housing market. earnings growth, grinding to a haflt vix popping over 20% the dollar value in question and the bond market, you know, signaling possibly a recession with inversion here.

yes, manufacturing service has been bad everything else looks pretty good though can. we shake this off? >> we could shake it off if we had a cessation in trade wars and we actually had some stimulus to get some of these more abundant economies picking up the problem is like what bob had mentioned earlier and hit the nail on the head how rapidly these can deteriorate. even including disruptions in trade flows where you actually stop, a cargo ship coming from asia through the south china sea where china has a huge military presence now that would ripple through markets and it is one of the tools they have. so we're not done in these trade wars that's important and it is against context of global economy we've beaten off to some extent. the slowdown we've seen on investment means we can't keep this going either investment has to come back or we're going to start cutting jobs

>> against that back drop, and there is so much more caution on the street as you know well. it's going to be all clear on t the economy, that the stock market is an attractive place to be right now >> as you well know, i'm not an economist or an analyst. i'm just an economic realist let's put things in perspective in today's world in today's world, the dow jones is selling at sfeens times earnings no big deal. interesting enough, as you get a yield of 2.31%, a yield of 2.26 on the 30-year government bond logic would tell you, you're going to make a lot more money in those 30 years by being in the dow jones. is it going to be choppy in here yes. what you have is not the investors or the market controlling itself what you have is the traders controlling the market what they're ending up doing is buying the headlines and sending

the headlines. logic tells you, if you buy or sell off the headlines, at some point in time you'll deliver the newspapers and you're staying your picks do you want to respond to that you're positioned very differently and have the glass half empty attitude here >> yeah. a little more cautious an undervalued market can become more undervalued if you're looking purely at valuation, the foreign economies. not concentrating on the u.s >> the performance there, as you know well, it's deserved the low multiple it has not been great and the economic fundamentals look so much worse >> if you're not buying in early, you're buying too late and as far as the tariffs go, which could exacerbate the situation both domestically and internationally, let's just home we didn't bring a notify to a gunfire. >> how many rate cuts and how much easing do you now expect

this year? >> well, i still have two rate cuts this year another one in semi, another highly likely in december. i do have a recession in 2020 because i'm very worried about how this will cascade is that the fault lines in the system are not great. corporate debt is an overhang. we have a lot of systems if we do not have a cessation in the trade wars, we will get a recession. >> the market in a nut shell thank you all. coming up, the tech wreck. the sector losing 216 billion in market cap yes is it time to buy in or is the downturn far from over plus, it's been four years on the dot since bob iger gave the warning on tv that sent investors fleeing disney stock now we're up 27% just this year. will the earnings momentum keep that going we'll find out get ready at your engines. jay leno with his show, fast

ca cars

stocks are rebounding today. there's nasdaq this follows its worst day of the year yesterday some of tech's biggest names including microsoft, amazon,

alphabet, suffering a combined market loss of $162 billion. for more, i'm joined by paul meeks. john is here as well i'll just start with you when you have a name like apple still down more than 15% from last fall's highs, do you pick that up? do you pick up names hit hard here >> i would consider picking up a couple of names. apple not one of them. i would like to see apple first before i get reinterested, even though i do have a core interest in the name. if it gets back to where it trade in the lay may, early june, at about the 175 to 180 handle some of the other stocks, i'm more inclined. facebook, google, amazon i think there have been some stocks even without the chinese issues have been whacked. companies in fin tech that i'm interested in like square at $60 a share, should it get there

pay pal. you have some relatively defensive plays in stocks like visa and mastercard and it is the top performer in the 100 today. >> i don't know if visa and mastercard are defensive anymore. they feel like the biggest names in the market, paul. >> i don't know about that they still, if you take a look, have nice support and they just don't have the volatility. if you look at the price charts over a long period of time, they've gone from southwest, pretty consistently to northeast. it doesn't appear to have much china exposure is there a fundamental reason why fang is the place that is taking the brunt of the pain in the sell-off it has disney exposure and

they're getting ready to come out with plus. i know i've got an 11-year-old and an 8-year-old myself 11-year-old can't stop talking about marvel. it's like a, he was quizzing his little brother on the actor names for various marvel super heroes >> it was my dad that did that now it's the younger generation. he can't conceive of, these were once comic books it is like an apple aura you don't even have to include star wars in that. it is boys and girls, all ages >> they this allow pre orders. what is today? 2016, right? no, 2015 four years ago, bob iger on the earnings call made the comments about espn that extent stock lower and it stayed there for

years. how high is the bar? >> there is no sign of espn growing or any of its cable networks, abc, disney, anything. they need to really see growth now, disney came out in may and said we see 60 to 90 million subscribers happening. they do have fierce competition. the other thing i'm looking at, they are the film mega to beat i mean, they own the market. 40% of the market. where does that revenue come from china. sometimes they have blocked them if this spills over and they don't allow disney to export films, you can imagine investors

will get weary what names do you think have most exposure? or any oversold? >> even though i like them long term some of the company that's are component vendors, semiconductors, that might be a great place over the long term for a 5g buildout. in the near term, they'll be under some pressure it worries me in the short term >> all right appreciate it. thank you very much. coming up, did china just blink by taking steps to stabilize its currency last night or did we get a look at how they're really in the driver's seat? plus, he has a love of cars and cracking jokes and he's gearing up for a new season of jay leno's garage.

shares are down 27%. the milk producer citing dairy commodity inflation and volume pressure as some of the reasons for that share change. shares are take two interactive up nearly 9% record engagement, ongoing success and grand theft auto are

helping results. and energizer holdings down 12%. the company said strength in the battery business is being offset by weakness in auto care products let's get to meg. >> the swiss drug giant is trading lower on a notice from the fda. the agency says that there were data manipulation issues in the application for the company's newly approved gene therapy. this is a very important drug for novartis it was just approved in may. you'll probably remember it because hit the $2 million price tag. the fa says the subsidiary knew about these data manipulation issues before the drug was approved but didn't notify the agency until after the drug was approved they did say it still believes the drug should stay on the market it is investigating the situation. it says it will use the full

authority to take action if appropriate which means civil or criminal penalties we've rehed out to the company and we'll bring you more when we have it. >> start your engines and get geared up. the fifth season for jay leno begins the long time host of the tonight show and some famous friends take us behind the wheel of some of the most iconic vehicles ever made he takes kevin hart on a death defying ride on one of the most outrageous off-road vehicles >> this is great you can drive it over just about anything it was the bumping and sliding

it cradles you like a baby >> oh, my god! >> speaking of babies, how is kevin doing? >> jay, you cannot kill him. >> joining me now, jay leno, the host of jay leno's garage. thank you for joining us >> thanks for having me. i was watching one of your previous guests, kevin o'leary and he was talking about how cars are a terrible investment i would tell him that i bought my mclaren f-1 in 1999 for 800,000. the last offer i got was $17 million. one just sold for $22 million. we'll have to debate that sometime >> yes, you will you know what i was thinking about. your show has flourished even

while america's love for the car in general most people barely want to get a droifrs license. >> that's true it is different. i think it has more to do with the fact cars are more appliance like than they used to be. my mother knew nothing about cars, but she knew she opened the hood a a car breaks, you call aaa, they come and get it. so there is less involvement for young people on the upside, cars are being seen now as kinetic artwork. they're in museums and they're going for, you know, the prices of, well, i mean a ferrari gto just sold for $70 million. a bugatti went for $50 million the prices that artwork is going for. they're seen as, it is artwork that moves and looks exciting and gets people going.

>> if i tell i i lease my car, does that make you shake your head >> i know why people do it when it breaks you get another one. i like to own something. so if things come to an end, i actually have it i understand the advantages. >> i can always get an uber. you know they take car. >> but you're assuming where you're going is more important than what you're driving you have some incredible cars. another one in the season premier. there is a tornado involved? there is a storm chaser? >> oh, that was the storm chaser car. he had it built to chase

tornadoes. it goes right up to the tornado and then it sucks itself down to the ground so the tornado can't -- here it is. we tried to simulate it. the car is in park he lifts the hood up and flips it over. we want to give people an idea of what it is like to drive a vehicle in a tornado that's what he does. he has the wind chasers and they're really fantastic >> do you like the electric cars i know you've said in the past you're a big fan of elon musk and what he's done at tesla. what are your thoughts about people going electric? >> electric is the future. steam ran everything from 1900 to 1911. then from 1911 until now was steam. i predict a child born today, probably has as much chance of driving in a gas car as people

today have with driving a car with a stick shift they'll still be around. just not many of them. the advantage of electricity, i have a tesla i've had it three years. i've never done anything there's to fluids to change. if the new technology succeeds, it cannot be equal it has to be better. it can go 350 to 400 miles on a lot of electric cars now there is no major nance. they're faster than a gas car. there is almost no reason to have a gas car unless you're doing long haul duty >> we love to ask celebrities. you've made a ton of money on your cars. you've tried to be frugal. what is the biggest money mistake you've ever made >> the biggest money mistake ever made. i believe her name was linda >> is that a car or -- >> no. that's a person.

yeah, that's probably it i don't look at things i like to keep moving forward. >> all right what's the best investment >> that mclaren f-1. if you're interested in something and you love it, chances are other people will love it, too and the value goes up. anything they're not making any more of. bugattis, mclaren's, ferraris, rare models, those are the ones that tend to hold their v and go up if you're collecting ford tauruses, you'll probably have to wait a while to get money back on your investment. for the most part, if you look at a car, if it's of technical interest, if it's exciting to look at and fun to drive, those three elements will make for a car that will go up in value >> i'm glad we didn't hang on to that family ford taurus after all these years. it's a pleasure. >> thanks for taking the time. i appreciate it.

>> thank you jay leno tune in for the premier of jay leno's garage. 10:00 p.m. eastern and pacific now a cnbc news update washington will impose stiff financial sanctions on anyone who supports the venezuelian president maduro >> it allows to impose sanctions on any person or business or entity that materially assists the regime to keep it in power this is a rarely used tool by the united states. >> a magnetic bomb in the interior ministry counter narcotics division killed two people and wounded seven more in

kabul. no one claimed responsibility. the rapper meek mill will have to wait until next on to find out if he will be retried in a drug and gun case he arrived in court this morning. the judge has allowed him to remain free on bail. you're up to date. that's the news update coming up, trade wars don't seem to be stopping consumer from spending. plus, what about the transports? still signaling the market pain may not be over. and currency fluctuations hit the common line. arr.as common theme this qute what could next quarter bring if we start a currency war? we're back after that.

let's get you caught up on a couple market stories. it's time for rapid fire chief market strategist, dominic chu and bill griffith. >> i'm getting rid of that lime green dust per i had in the 1970s. i thought sure it was a good investment >> you should have gone with the bugatti, bill. first up, shake shack is

soaring. and this is not alone. this is a little theme developing here in the market. it joins a bunch of other estimates beating this quarter including starbucks and mcdonald's look at the same store sales shake shack was the under performer. what is the strength in the restaurants telling you? >> it tells you you have a consumer with discretionary income all prices, gasoline prices, fairly reasonable. you have a strong labor market and the 2 for $5 exactly. it's attractive. >> would you be buying the stocks here given now all the rallies that we've seen? you may want to wait for a pull back the fact is, i think there's continued growth chipotle was in terrible shape last year. and the analysts have turned

around i've noticed, actually, more lines. i don't like it. the fact is the share prices are going up and it is indicative of the bad news out of the stock. >> it is one of the last places the people will cut their spending on consumables like food they will cut on other material goods before they will stop dining out it is only a question of whether they go up the scale or the a capital grill or down the scale to mcdonald's and everybody else but the delivery thing was interesting with shake shack that deal with grub hub to do the nationwide rollout this is a theme developing >> we have two economies growing. this is a buyers economy it will be a consumer. you have a good job, discretionary income and low prices and low interest rates. it's a lousy time to be a producer in this economy right now for various reasons. >> it is a great point and you're right we'll come back to that. the shares are attempting to

rebound. coming off the worst day since may. they dropped 5% monday on fears it could hurt the bottom line. and this is worth repeating. apple is down 16% from its high in october of 2018 quincy, this is not a traditional thing. i don't want to call it dead money but it's been a while. >> it's had to navigate so many obstacles. one is just a slowdown the sales are down then you have, it has become the bellwether along with caterpillar, for example, for china. any headline in china, guess who goes down. we long at boeing and apple. is that fair >> the mark is the market. fell to the algorithms in they hit just like this

you know who they'll hit on the way down and up. but apple is also transitioning to the services. to the wearables and that is a hard transition for any company to make. >> it is an investment >> it reminds me a little of ibm as it was making the transition. >> those are in their time and age, widely held stocks. back then, ibm was widely held because it was owned by a lot of people these days, apple gets a wide amount of exposure they were selling and buying apple. a lot more traffic and a lot more exposure is the way you look at it but it is also a victim of its own success. it was more. >> think about where it sits as a value. is it growth consumer discretionary hardware it is in every single area

you can't go anywhere without finding apple in your portfolio. >> all right let's talk some trans ports. the weakness of this economy has been more on the industrial side the trans ports are down 6% over the last week. look at the data rail traffic, down 26 out of 27 weeks. the transport, seen as an indicator for the broader market is this telling us about the economy? that's the trillion dollar question >> they've been talking about the economy for several months look at berkshire hathaway over the weekend reporting earnings what were their weak spots so yes they are highly sensitive to movement in the economy. they lead a lot of indicators out there and they've been telling us, there have been problems with the production side of our economy. >> and the main question is this time different and i know i'm using that phrase intentionally. from in the past, they would tell us the broader economy was slowing.

if they're hit by tariffs -- is it more niche? >> we've talked about the cash cushion the companies have had for so long. i wonder if they've been willing and able to eat a lot of the higher costs that they've had to bear so the consumers don't have to if that's one of the reasons we have this bifurcated economy >> i think so. and i think you're going on see even more of this even if tariffs on those consumer goes go up. are the companies going to eat or try on pass it along to the consumer >> it could go on forever. >> and they have to stop spending and ultimately, they may have to lay off people in order to have a bottom line. >> and that whole cycle begins >> exactly i want to go over something near

and dear to my heart, the airlines when the business pulls back, sometimes it is a precursor to layoffs. if you can't cut back, you go to layoffs. very often you see it in business travelers >> do you see any sign of that yet? >> no. unfortunately. not yet. >> unfortunately. >> i can't get my upgrades >> on the currency issue, many companies have cited the strong dollar or currency valuations as a head wind. how much do you expect to be a factor because of what we're experiencing this week >> it will continue to be a factor everyone talks about the president's tweets the fact is, we want to have a weaker currency. especially in an environment where growth and demand for your exports are down you need to be competitive and a weaker dollar. weaker currency. it helps you be competitive. no doubt about it. and one company after another

saying it. i'm amazed at some of the positive head winds we've had. >> coke keecold, for example. you had a great piece of insight. we were asking if would you be a buyer of boehner but you are saying gold would be higher. a buyer of bitcoin >> goal has many narratives. central banks go into gold you can award. as a safe haven, regardless of where the dollar, is you get it strong money goes into gold now we're seeing it go into bitcoin. >> it would have been higher >> absolutely. just bitcoin >> thanks very much. it's been fun. thank you as always. the etf energy names touching an

all time low today going back to 2006 91% of the components in bear market territory how much lower could it go we will discuss that next. and take a long at the markets the high of the y 29.daup.2 it's part of being human. sonoma county declared a homeless emergency in 2018. you have to know the individuals you're serving to understand their needs. working with ibm watson we can bring together data spread across dozens of departments. that gives us a fuller view of the people we serve. dear tech, dear tech, we need to look after everyone in our community. and we want to help our fellow human beings. ♪ ♪ - stand up if you are first generat(crowd cheering)ent. stand up if you're a mother. if you are actively deployed, a veteran, or you're in a military family, please stand.

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welcome back to the exchange stocks falling to 52-week lows today. ten are energy names apache dropping to a level it hand seen since 2002 this is the oil and gas spider it sinks to its all time low going back to 2006 when this industry was created all four components are correctional bear market territory. joining me now, dan, the vice chairman cnbc's own brian sullivan is here as well

let me start with you. the drama in energy has played out in lock step with the drama in china does that make essential to you? >> it does global oils price in the dollars for the most part. as the dollars strengthened up against other currencies, oil has reacted as well. normally it would track with the price of oil this time the stocks have done a lot worse. investors have completely given up it's been a decimation and many of these companies are trading at valuations below where they were when oil was at $25 a barrel >> explain this to us. what's going on? >> well, there are two things going on one, what brian is referring to is that there is a break down in the relationship between domestic u.s. producers and investors. and they need a new social compact and it's not there

the other thing is that oil is a register of risk and very recently it was measuring risk in the persian gulf oil got to $75 a barrel. there's still enormous risk there. and in our count, there are 537 tankers in and around the persian gulf what has changed is of course, what has happened with china and what is now registering as risk about trade war, currency war, and a great slowing in the global economy which is the real fear and it is really this, moving into the currency war situation. it is particularly alarming. >> when you say we need a new social compact between the companies and the oil price, play this out for us this disconnect is pretty large. if you've been an energy investor, you've been creamed the last couple years with producing as high as it is >> it's an amazing story the largest oil producer

hey, we want some money back we want dividends or share buy back and i think producers are going through a period, the next few quarters, of adjusting to a different kind of capital discipline, stayingbudgets, and probably as a result of that, we're going to see, not probably, we will see a slowing in the growth of u.s. oil production we'll still grow, but not at that rate. the other thing that's now hanging over everything is the global economy we did our new pmi, and it shows that is at the lowest level since july 2012. there are a lot of blinking lights about risk in the global economy, and that translates into weaker demand that, too, is weighing on the oil price, and in particular, on the oil companies. >> brian, we saw even this morning the eia saying their estimate of how much we're going to produce this year has come down a little bit. talking about production, demand a little bit of a softening there. you look, and i guess there for those forces to help find a bottom in the market

>> there's two stories here. normally, the stock and oil story go hand in hand, but to dan's point, now they're not oil is trading on the concerns about global economies, too much oil right now. the stocks are trading because investors are sick of it to your point, they haven't had any return in years. >> is this cupitcheration? >> i don't know, but two things have happened that spooked people midlevel producers laying off 30% of staff we don't see layoffs in oil and gas, and concho, who you mentioned in the intro, they had disappointing well results because they realized if you put a bunch of straws in the ground, too many, you're not going to get the results. that's the first frack crack i guess we have seen where confidence in the fracking technology has actually been shaken >> dan, we'll give you the last wurtd on that. >> i think it's -- i think there's a lot of learning going on and we'll still see growth, but i think it's important to

differentiate between the independence, what brian was talking about, and the majors which help pay dividends, and that's the main reason they're investing there. for the chinese currency war, they have set it as a red line or as a people's bank said yesterday, a precipice, and that's a worry for the entire global economy >> the average big cap stock is down about 6% this year. not bad. the average stock opraerating in north dakota is down 56% >> that tells a story. >> it's brutal thank you both i appreciate it. >> markets are rebounding somewhat today after china fixed the yuan last night. a little higher than people had feared was that a sign that cnahi blinked? we'll explore that next when the exchange comes right back. - stand up if you are first generation college student.

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exchange china facing pressure on two fronts the trade war with the u.s., and political unrest in hong kong. those two events are intertwined. joining me is explain is fred kemp, a cnbc contributor fred, the hong kong market is down for something like ten straight days now. we have seen unrest as michelle said yesterday, that we usually see in other european countries,

for example, or third-world types of places. how serious are events in hong kong, and how important is it that the chinese don't look weak right now? >> well, i think it's enormously serious. i think president xi jinping is facing his biggest challenge yet as chinese leader. on the internal front, obviously, with hong kong, nine weeks now of protest, and just today and yesterday, chinese leaders have bib sending messages to hong kong protesters don't mistake our restraint for weakness and when one was asked whether or not military force would be ruled out, he wouldn't rule that out. xi jinping has to show himself able to create order without doing anything excessive. on both fronts and in both cases, he doesn't control president trump entirely, and he doesn't control the protesters entirely. he's in retreat right now. it's the annual government

retreat, government leaders, and it's going to be very interesting to see what comes out of that probably in mid-august >> sure, and there's so many different interpretations of the events of the last few days and whether it shows china has a strong or weak hand. here's the "wall street journal" today, not op-ed, just the regular coverage they say china's leaders appear to have concluded they won't secure an accept trade deal with president trump. what they can do is try to weather the next 18 months while inflicting maximum political damage, hoping the weakening economy delivers a new president. what do you say? >> that's comes close to the mark the person i read regularly on twitter and all of your viewers who care about what the chinese government is doing should read him, xi jin, the editor of the global times i'm read you exactly what he said, because he now in his tweets comes closest to government thinking. no new tariffs by no means bring closer a deal that the u.s.

wants. it will only make it further away i think the chinese will no longer give priority to controlling trade war scale. they will focus on the national strategy under a prolonged trade war. so i don't think it's just through 2020 i think they see this is a generational struggle between two systems, economic and political, and this may be costly to them, may be costly to their consumers, to their economy, but i just don't think they're going to make big concessions from their side at this point with president trump. >> what do you make of their move last night to fix the currency stronger than it was trading in the market? and futures were down 600 points in the u.s they fixed it higher, we're turned around and we're positive today. did china blink? >> i don't think china is in a blinking mood. i think china sent a signal that we have weapons other than trade that we can use. and there's a lot of other things they can do, too. they can point to licenses they can make companies, u.s.

companies be called unreliable they can just say don't trade with them any longer, just as they did with agricultural goods after the tariffs. so i think they were sending a message that we can do stuff but they also know that devaluing the currency doesn't help them. it would raise their debt cost it would increase the consumer costs. and it would cause them a lot of difficulties with their domestic demand and domestic economy. they wanted to send a signal, but they didn't want to go much over the seven mark in terms of the price of the yuan. >> the only thing it seemed to do successfully is provoke the president. >> it provoked the president, and now the president is in an interesting position people are talking about a trump put. if the market goes down far enough, he could ease tariffs. he could ease sanctions on huawei take some other action i just don't see how he pulls that off politically any longer. because i don't think the

chinese are going to give them -- give him an opening from their side in terms of their own concessions. >> fred, thank you really appreciate it fred kemp joining me today that does it for the exchange. i'll go join tyler for "power lunch," which begins right now >> it sure does, kelly thank you very much. we will see you in a moment. welcome, everybody i'm tyler mathisen here's what's new at 2:00 on power for a tuesday. stocks bouncing back after the worst day of the year yesterday. the dow up nearly 200 points right now. 188. but how do you know when it is safe to get back into this market or is it already >> plus, the trade turmoil showing no signs really of slowing down as tensions between the u.s. and china continue to rise we'll tell you just how frisky it could get and later, disney soaring this year, as it gets ready to launch its highly anticipated streaming service. we will tell you what to watch as the media giant gets read